The New Zealand dollar may be going through a period of volatility but a new survey shows New Zealand businesses expect it to recover back to 80 US cents by next March.
The inaugural ASB Institutional Kiwi Dollar Barometer released on Tuesday shows that businesses see potential for the kiwi to ease further against the greenback in coming months before staging a recovery.
The average exchange rate expectation is higher among importers than exporters.
Importers, on average, expect the kiwi to recover to 77.2 US cents by the end of this year, and reach 80.3 US cents by March 2013.
The average expectation among exporters is for the kiwi to ease further to 74.8 US cents by the end of this year and recover to 78.4 cents by March 2013.
ASB Economics forecasts the kiwi to recover even higher - to 83 US cents in March 2013.
"The extent to which the NZD lifts will depend on how successful Europe is in containing the ongoing debt crisis, which has pulled the NZD down recently," said ASB chief economist Nick Tuffley.
Over 350 businesses were interviewed for the survey from May 9-15, after the kiwi plunged below 80 US cents and the Reserve Bank said the currency may fall further because of a deterioration in market sentiment and lower commodity prices.
The survey also asked businesses how the recent strength in the New Zealand dollar has affected their investment plans.
Just over 60 percent of businesses that only import reported the high dollar has increased their investment plans.
In contrast, around 53 percent of businesses that only export report the high dollar has led them to reduce their investment plans.
NZN